a)Gala Limitedenters into an agreement with the shareholders ofWada Limitedon 1April2021to acquire a controlling interest inWada. The agreement provides that the effective date of transfer is 1July2021and is subject to approval by the shareholders of Gala at a meeting scheduled for 1August2021.

Required

What is the date of acquisition? Explain. (5 marks)

b)In June 2020 Mzima and Springs started Nova, a joint venture in manufacturing. Nova was formed as a limited liability company and the contract between Mzima and Springs provided that Mzima should contribute Machineries to the joint venture, with Springs providing all the operating, marketing, selling and distribution services. In order to protect its interests after making such a substantial investment, Nova (supported by Springs) guarantees Mzima a minimum return on its investment of 12% per year over 15 years.

Required

Should this be accounted for as a joint venture? Explain clearly. (8 marks)

c)Financial statements provide all the information that users may need to make economic decisions. Discuss (12 marks)